Correlation Between China Greatwall and Air China
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By analyzing existing cross correlation between China Greatwall Computer and Air China Ltd, you can compare the effects of market volatilities on China Greatwall and Air China and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in China Greatwall with a short position of Air China. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Greatwall and Air China.
Diversification Opportunities for China Greatwall and Air China
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between China and Air is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding China Greatwall Computer and Air China Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air China and China Greatwall is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on China Greatwall Computer are associated (or correlated) with Air China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air China has no effect on the direction of China Greatwall i.e., China Greatwall and Air China go up and down completely randomly.
Pair Corralation between China Greatwall and Air China
Assuming the 90 days trading horizon China Greatwall Computer is expected to generate 1.8 times more return on investment than Air China. However, China Greatwall is 1.8 times more volatile than Air China Ltd. It trades about 0.02 of its potential returns per unit of risk. Air China Ltd is currently generating about -0.04 per unit of risk. If you would invest 1,321 in China Greatwall Computer on November 9, 2024 and sell it today you would earn a total of 102.00 from holding China Greatwall Computer or generate 7.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Greatwall Computer vs. Air China Ltd
Performance |
| Timeline |
| China Greatwall Computer |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
| Air China |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
China Greatwall and Air China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Greatwall and Air China
The main advantage of trading using opposite China Greatwall and Air China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Greatwall position performs unexpectedly, Air China can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Air China will offset losses from the drop in Air China's long position.The idea behind China Greatwall Computer and Air China Ltd pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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